Tank sales lift General Dynamics 2Q profit 25 pct

Defense contractor General Dynamics Corp. said Wednesday its second-quarter profit rose 25 percent, boosted by higher sales of armored vehicles and tanks. The company also raised its 2008 outlook.

Company shares rose $2.17, or 2.6 percent, to $85.62 in morning trading.

The Falls Church, Va.-based company earned $641 million, or $1.60 per share, in the latest quarter, compared with $513 million, or $1.26 per share, a year earlier. Excluding a nine-cent gain from a tax refund lawsuit settlement, earnings were $1.51 per share.

Analysts polled by Thomson Financial were expecting $1.44 cents per share in quarterly earnings from continuing operations on revenue of $7.23 billion.

Quarterly revenue rose nearly 11 percent to $7.30 billion.

Helped by expectations of soaring sales in its corporate jet business the company also significantly raised its 2008 earnings outlook, saying it expects a range of $6.00 to $6.05 per share. Previous company guidance was between $5.55 and $5.65 per share in 2008.

For the year, analysts expect General Dynamics to earn $5.91 per share on $29.65 billion in revenue.

General Dynamics, which makes tanks, submarines, warships and Gulfstream private jets, has reaped big profits in recent quarters as the Pentagon scrambles to buy and replace equipment for wars in Iraq and Afghanistan.

The company is one of several contractors working on the mine resistant ambush protected vehicles, also known as MRAP, that are in high demand from military commanders to protect troops from roadside bombs. The Pentagon made the program its top weapons buying priority last year.

It also expects robust sales of its corporate jets in its Gulfstream subsidiary, primarily in overseas markets such as China and the Middle East. The company began taking orders earlier this year on its newest and widest ranging plane, the G650.

But the fate of a big ship building project remains unclear. Members of Maine's Congressional delegation said Tuesday that the Navy has said it will build only two of the advanced DDG-1000 Zumwalt destroyers the service had planned for an upgrade of its fleet. The ship proved costly, more than double the $1.3 billion cost of existing destroyers.

General Dynamics spokesman Rob Doolittle said the company has not had any official notification from the Navy on the destroyer's fate.

Sales growth was highest in the company's combat systems division _ which makes MRAP vehicles and other war fighting tool _ rising 17.7 percent to $2 billion. The aerospace unit, made up of Gulfstream, saw sales grow 10 percent to $1.3 billion. Sales in information technology were up nearly 7 percent to $2.5 billion, and rose 9.6 percent to roughly $1.4 billion in marine systems.

For the first six months of the year, General Dynamics earned $1.2 billion, or $3.04 per share, on revenue of $14.3 billion.